The VUCA World Order

Use Volatility, Uncertainty, Complexity, Ambiguity to Your Advantage

June 16, 2017,
Bruno Jacobsen

A couple of years ago, Deloitte’s CEO Cathy Engelbert said that in 10 years we won’t recognize many of the companies leading the world. And we are all familiar with stories of smaller companies and new innovations changing the world in what seems like an instant. But can organizations prepare for these changes? What organizations do to create good strategies and prepare for the future in a rapidly-changing and increasingly complex world?

In the 1990s, a new term to describe our world appeared. The US Army War College described the new world order as volatile (V), uncertain (U), complex (C), and ambiguous (A). Initially, this was used to describe the state of world affairs in a post-Soviet Union world. But VUCA quickly became common language in the world of strategy making, especially in governments and organizations.

In this type of world, old ways of making strategy are no longer sufficient. We need new strategy-making processes that in part begin with the assumption that the world is VUCA.

Here are 2 things such a strategy-making process would need.

Continuous probing for the future and trends

In a world of VUCA, it is important to be constantly curious about what the future has in store. Most organizations already probe for new opportunities and threats on a periodic base. But doing it a couple of times a year, or using the information only a couple of times a year, is not enough anymore.

Today it’s important to engage in continuous, on-going probing throughout the entire year. Only by doing so can trends and patterns emerge out of the constant change and complexity of the world. As Eric McNulty puts it PwC’s strategy+business, “persistent probing will help you discern if it’s off by 5 percent of 95 percent before events swiftly reveal the answer to you.”

The practice of foresight, therefore, is the first step towards crafting successful strategies.

Get other people involved

Another important factor for creating good strategies in a world of VUCA is to get people in the organization involved. And this can happen in many ways.

Foresight does not need to be a small-team effort or the effort of a single person. In an organization, it can be done by larger teams or even the whole company in, say, some smaller companies. By getting people involved, if there are clear guidelines and a process for it, the information collected will be vaster.

After collecting the information, strategists and leaders should look to inspire debates and discussions around findings. Every time future trends emerge or specific events occur, a new conversation can start around them.

As People Matterssuggests, eliciting and evaluating arguments, asking the right questions, being open-minded about alternative viewpoints—these are all important components of a capable leader in a VUCA world.

Of course the decision-making process can remain with top management, but other employees or members of the organization can in many cases participate in the process of foresight. This can result not only in better strategy but also in innovation.

For example, imagine a small company makes wood parts for a certain market but foresight experts note that specific market will soon become irrelevant. All company employees can come together and discuss both the trend and what should be done. The solution of using those capabilities to serve a radically different market and one much more successful than the previous one can come from anyone.

But there’s another reason why getting people involved is important. As mentioned by McNulty, constant change brings uncertainty and most people are uncomfortable with uncertainty, especially in the context of VUCA. People like to know that they will have a job tomorrow. And when they don’t know what is going to happen a few months or years down the line, problems can arise within an organization.

By involving people in foresight and strategy work, people will trust in the process and organization more. This trust comes from an increase in transparency and because people feel they finally have a voice, which can naturally have a positive impact on the company.

So engage other people, start and moderate debates, let them be part of the process. It will make the company smarter and employees more productive.

Strategy with VUCA

In a VUCA world, there is no doubt that things that used to work no longer work. As Marco Mancesti writes in IMD, the old “set goal – plan – execute” does not work anymore. We need strategy that is context-aware and malleable, with a strong focus on a bigger vision or mission.

To do this, it is important to understand the future today and adapt as it changes. The best way to do it is on an ongoing basis, always aware of what is happening that might affect your organization, and to get people involved in the process.

Do these and you’ll have a more resilient and well-prepared organization.

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